The object which Shawn saw on his way home last night could had been a UFO but, because he was traveling close to the airport, he wasn’t sure.
a) could had been a UFO but, because he was traveling
Wrong. "could + HAD + been" --> wrong grammar.

b) might have been a UFO but, therefore it wasn’t likely since he traveled
Wrong. "therefore" is illogical here, we need a reason --> since/because is correct.

c) may have been a UFO but, since he was traveling
Correct. "may have been" --> conditional structure.

d) might possibly had been a UFO but,
Wrong. "might + possibly" --> redundant.

e) could have been a UFO but likely not since it could be[/quote]
Wrong. "it could be close to the airport" --> wrong. The correct meaning is: Shawn, not the UFO, was traveling close to the airport,

Hope it helps.

Is it ok to use 'may' instead of 'might' to speculate about past event?
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I thought that "since" can't be used synonymously for "therefore" on the GMAT and that it only can be used to describe events on a timeline.

"I haven't eaten since yesterday" correct

"I'm hungry since I haven't eaten" incorrect

This is my understanding, can somebody please she light on this issue?